During Mobile World Congress 2014, the Green Power for Mobile (GPM) team brought together industry stakeholders from across the globe to discuss the ESCO business model and its adoption challenges for Mobile Operators (MNOs) and TowerCos. The session was well represented by MNOs, TowerCos, ESCOs, technology providers and investors from across regions.
The discussion touched on key issues pertaining to the topic, including:
- The definition of ESCO
- The structure and form of ESCO
- Risks associated with the ESCO model adoption
- Contractual and ownership challenges
- Attractiveness to investors and challenges in fund raising
- Key success elements to make the ESCO model work
- The adoption and selection process for MNOs and TowerCos
The group discussed in detail the definition and what makes an ESCO in the context of power provision to the mobile telecom networks. The group highlighted that asset ownership is the key aspect of ESCO business, impacting the form and structure of an ESCO. An ideal ESCO would have strong stakeholder management capabilities, low cost of capital, technical expertise and energy as a core activity with long term view of the business.
However, a key question that came was to who should take the lead to form an ESCO – technology provider or investor or a company with strong experience telecom power management and operations? An ESCO with strong operational experience, energy management capabilities with key technical strengths should come up with strong back up in partnerships, including financial as well as technology partners, in order to lead the ESCO engagements with MNOs and TowerCos.
The successful adoption of ESCO model will highly depend on the ability of an ESCO to own the assets and to win the confidence of MNOs. To achieve this, the ESCO would need to firstly, create a clear value proposition which is attractive for both MNOs and the business, and secondly, demonstrate it through pilots for a reasonable number of sites. The ESCO would also need to clearly demonstrate a path of adoption for the MNOs and showcase the ability to bring down the cost of operations as close as possible to the ideal scenario of grid power. The group also expressed that pricing is the key and both parties should be willing to share the benefits in a reasonable way in order to make the ESCO model successful and sustainable in the long run.
In conclusion, the group called for a strong collaboration amongst the stakeholders including MNOs, TowerCos, ESCOs, and investors to try, test and build the best practices in order to establish right model for ESCO business for scaled adoption. The group highlighted the role of GPM in bringing together various stakeholders including the government and regulators to sensitize them with potential opportunity and bring the necessary policy guidelines to catalyse the adoption of ESCO business model.
Read detailed takeaways from the session at Mobile World Congress